According to the recent analysis released Tuesday, credit union health declined from a first-quarter figure of 2.446 to second-quarter score of 2.402. Quarter-to-quarter score comparisons between first and second quarter show a 1.76% decline in the overall industry score, driven by lower scores for efficiency, operating expense, delinquency, asset growth and membership growth.

On a positive note, scores for net worth, return on average assets, charge offs, deposit relationships and loan relationships showed improvement, according to the report from consultant Tom Glatt Jr. in Wilmington, N.C.

Glatt Consulting’s HealthScore process is based on best-practice performance thresholds for 11 different key credit union metrics. Individual credit union performance is analyzed against performance thresholds for each metric, a process that results in metric-specific health scores. These scores are then averaged to arrive at an overall health score for the credit union. Using these institution-specific scores, the process is repeated to derive scores for the industry itself.

Many of the changes quarter-to-quarter, positive and negative, were driven by common seasonal influences impacting asset and membership growth, the consulting firm said.

The greatest score decline was for efficiency, which measures the relationship between operating expenses and income. Efficiency often fluctuates between positive and negative changes, but given legislative/regulatory decisions impacting non-interest income, tight margins due to the low interest rates, and seemingly perpetual increases in operating expenses, the "normal" trend has been continuous negative scores.

Though well removed from the lowest historical score of 2.148 calculated for the first quarter of 2009 during the latest recession, recent scores rank below the industry average score of 2.420. The highest current individual health score is 4.727, while the lowest is 0.18. These scores are held by credit unions in Ohio and Illinois, respectively, the consulting firm added.